Author Topic: Credit score: Should I get a new card?  (Read 3488 times)

La Bibliotecaria Feroz

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Credit score: Should I get a new card?
« on: October 21, 2014, 10:54:11 AM »
CreditKarma is reporting my score at 674. Four years ago, we missed three mortgage payments and short-sold a house (wanted to move out of state at the bottom of the market and didn't realize what we were getting into).

Mr. FP's credit score has largely recovered--he took out an ill-advised car loan in his own name just before the shit hit the fan and has since sold the car and paid it off. Also, all our joint credit cards (I believe we have four altogether) are in his name, and I'm an authorized user. I think our total credit from those cards is $40-$50K, but we only use them for our regular expenses.

In my own name, I have one credit card with a $4500 limit and I occasionally used it. I recently asked them to raise my limit to my credit utilization would be lower. Would it help my score if I got a second card--from a store we shop at often, maybe? They did not give me as much of a raise as I asked for, so I got that piece of paper with your score and info about it and it said that I had "too few accounts currently paid as agreed."

We want to buy a house in the next year or two, so I want to get my score up but have some time to do so. Not sure what else will raise my score as I have already paid off my student loans and have no car loan and no need to finance anything.

skunkfunk

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Re: Credit score: Should I get a new card?
« Reply #1 on: October 21, 2014, 11:21:34 AM »
Is that house fiasco still on your report? If so, more time is the only thing that will fix it. My score is about like yours and I've never missed a payment or anything, good thing I won't be needing credit ever again (probably.) That said at 674 you'll get a decent interest rate. Credit Karma is the consumer score, your score for mortgage purposes will be different. Mine was much higher, ~60-70 points higher when the bank ran it than CreditKarma said it would be. With your prior housing situation, that might be opposite for you.

Sylly

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Re: Credit score: Should I get a new card?
« Reply #2 on: October 21, 2014, 11:43:51 AM »
Is that house fiasco still on your report? If so, more time is the only thing that will fix it.
Credit reports usually go back 7 years, so I would assume their missed payments are still on it.

In my own name, I have one credit card with a $4500 limit and I occasionally used it. I recently asked them to raise my limit to my credit utilization would be lower. Would it help my score if I got a second card--from a store we shop at often, maybe? They did not give me as much of a raise as I asked for, so I got that piece of paper with your score and info about it and it said that I had "too few accounts currently paid as agreed."
Not sure how much a new card account will ding your credit. Or whether the increased number of accounts will sufficiently counter that.

But, if you're going to get another card, instead of getting some random store card, why not evaluate what cards you have, and look for some reward credit card that have a beneficial perk or at least some decent cashback?

higginst

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Re: Credit score: Should I get a new card?
« Reply #3 on: October 21, 2014, 12:14:52 PM »
But, if you're going to get another card, instead of getting some random store card, why not evaluate what cards you have, and look for some reward credit card that have a beneficial perk or at least some decent cashback?

^Agree with this.

Also, the hit from the enquiry from whichever card company you go with will have a negligible effect on your overall rating, everything else remaining equal.

However, having a larger unused credit limit (lowering your utilization) and creating a "thicker" portfolio by having more accounts with good payment history will greatly improve your score, especially over time.  It may not compensate fully for the derogs you have from the short sale, but it will help.  As a counter point, if you have too many credit lines open, it may affect your ability to borrow because some FIs include the limits for your debt-servicing calculations.  Although, you can usually work around this if you can show they are revolved fully each month.

The only other option I can think of for upping your score would be a cash-secured loan that you repay in monthly instalments.  I know Credit Unions in my area will do this for folks who want to increase their scores ahead of actual borrowing and facilitate credit "rehab."  How it works is you'd have a CD/Term Deposit on deposit at the FI which they would have a hold over as security for a loan to you of the same amount. You would then repay the loan on instalments and once paid out, you'd have access to the CD funds again.  This would give your report some positive instalment loan repayment and contribute to the overall thickness.  You won't be earning much of a return on the funds though, and you may end up having to pay a small amount of interest, but it may be worth it if you get a better rate on your mortgage.

skunkfunk

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Re: Credit score: Should I get a new card?
« Reply #4 on: October 21, 2014, 12:18:13 PM »
Keep in mind that opening new accounts does negatively affect your average account age. I bet it's a wash.

Thegoblinchief

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Re: Credit score: Should I get a new card?
« Reply #5 on: October 21, 2014, 12:43:05 PM »
Depends whether you need to have both names on the loan in order to qualify.

La Bibliotecaria Feroz

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Re: Credit score: Should I get a new card?
« Reply #6 on: October 21, 2014, 01:15:32 PM »
Thanks for all the helpful advice, everyone! I do WANT to be on the mortgage whether I NEED to or not. And I will almost certainly need to be as we would like to stay close in to the city. Our hope is that I will be working full-time in the foreseeable future and adding considerable income.

It sounds like a new card might be the easiest and most-likely-to-help option. Would I qualify for a rewards card with my credit and very little income?  (I've been making $10K a year, but I just got a new part-time job that will pay $20K and I will probably make a couple thousand more editing trivia questions on the side.) I guess I thought a store card might be easier to get/come with perks. Any specific recommendations?

Thegoblinchief

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Re: Credit score: Should I get a new card?
« Reply #7 on: October 21, 2014, 05:18:02 PM »
Either the Amazon rewards card or the Costco Amex are good everyday cards for cash back.

No idea what kind of scores you need. Apparently mine, without doing any conscious optimization, is practically at maximum (830).

La Bibliotecaria Feroz

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Re: Credit score: Should I get a new card?
« Reply #8 on: October 21, 2014, 09:24:00 PM »
Have successfully obtained Amazon card! We'll see if it helps.

I used to have excellent credit... Sigh.